Q&A: Intel Looks to Asia for Design Ideas

Chip powerhouse Intel Corp. has relied on Asia’s vast market and low-cost labor to help drive the company’s growth in recent years. Now that the region’s talent pool has expanded its skills beyond manufacturing, Intel is looking to its engineers in Asia to help design processors that go into products like smartphones and tablets as well as personal computers.

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Intel’s facilities in Asia package and test 80% of its products destined for global markets. The chipmaker opened its first facility outside the U.S. in 1972, in the northern island of Penang, Malaysia, which has grown to become one of its largest technology development centers in the world.

Since then, other sites have sprung up in India, Taiwan, China and Vietnam, where Intel has invested more than $10 billion and hired more than 20,000 employees, about one-fifth of its total workforce.

Beyond assembly and testing, Intel has set up Malaysia Design Centre, which has contributed significantly to its latest fourth-generation processor known as Haswell, launched in June. The team also plays a key role in the development of current and future generation Clover Trail, Bay Trail and Broadwell platforms.

The Wall Street Journal spoke to Robin Martin, vice president of Intel’s technology manufacturing group, and Christopher Kelly, head of Intel’s Malaysia Design Center, on the company’s operations and future plans in Asia.

Edited excerpts:

WSJ: What is driving Intel in Asia?

Mr. Martin: The market is huge in Asia and it continues to grow. We are at the end of the supply chain so for us, that proximity matters. The logistics and infrastructure in Asia continues to improve, so it makes sense for us to grow the seeds that we’ve sown here.

We define our assembly and test roadmap by ensuring everyone develop at the same pace. But the products that they work on may differ. In Costa Rica, they focus on servers where most are built for the U.S. but that is changing now because a lot of the original equipment manufacturers are now coming out of Asia.

Chips for smartphones, tablets, and SOCs (system on chips) are coming out of the facility here in Malaysia, but as the volume grows, we will send them to Vietnam because of the cost structure there.

Mr. Kelly: We operate with around 2,000 engineers in Malaysia, 3,000 engineers in India and we have around 3,000 engineers working on hardware and software in China. In Taiwan, we have about 1,000 engineers.

This is where the majority, almost all of our rapidly growing markets are. Each of the sites has capabilities across the spectrum from design to manufacturing test with a slight twist.

Our team in Bangalore do design work for servers. We do chipsets and central processing units in Penang. In China, we do a lot of platform and software developments. In each of the region, they are driven by access to talent and customers.

WSJ: Is Intel hiring more engineers in Asia?

Mr. Martin: We have an installed headcount base in both China and Malaysia, where we have been for quite some time, so growth will be incremental in nature. Bulk of the growth in number of engineers will be in Vietnam because that’s where they are starting to move more of our SOCs products there.

We have about 1,000 engineers in Vietnam, and it will get to 4,000 once it’s fully ramped up. It will be combination of engineers and manufacturing technicians. We’re taking graduates straight out of school, send them on scholarship to U.S., and they become employees once they come back.

WSJ: How was the Malaysia Design Center conceived?

Mr. Kelly: In 1991, Intel nearly shut down and exited the micro-controller business in Penang that made simple chips for industrial equipments, machineries and other devices. It wasn’t profitable back then.

Rather than shut it down, the engineers proposed to (former Intel Chief Executive) Andrew Grove to keep the business running by adding value with design work. We had about 30 engineers back then but today, we have 2,000 engineers at the design center.